Correlation Between Simon Property and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Simon Property and Texas Roadhouse at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Simon Property and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Texas Roadhouse, you can compare the effects of market volatilities on Simon Property and Texas Roadhouse and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Simon Property with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Texas Roadhouse.
Diversification Opportunities for Simon Property and Texas Roadhouse
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simon and Texas is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and Simon Property is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Simon Property Group are associated (or correlated) with Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of Simon Property i.e., Simon Property and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Simon Property and Texas Roadhouse
Considering the 90-day investment horizon Simon Property is expected to generate 1.4 times less return on investment than Texas Roadhouse. But when comparing it to its historical volatility, Simon Property Group is 1.0 times less risky than Texas Roadhouse. It trades about 0.08 of its potential returns per unit of risk. Texas Roadhouse is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,417 in Texas Roadhouse on August 28, 2024 and sell it today you would earn a total of 10,795 from holding Texas Roadhouse or generate 114.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Texas Roadhouse
Performance |
| Timeline |
| Simon Property Group |
| Texas Roadhouse |
Simon Property and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Texas Roadhouse
The main advantage of trading using opposite Simon Property and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Texas Roadhouse can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Texas Roadhouse will offset losses from the drop in Texas Roadhouse's long position.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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